8.Shareholders’ Equity:

Dividends

On January 29, 2014, the Company’s Board of Directors approved the payment of a $0.05 per share quarterly cash dividend to shareholders of record at the close of business on February 12, 2014, which was paid on March 3, 2014.

On February 4, 2014, the Company’s Board of Directors approved the payment of a $5.00 per share special cash dividend (the “2014 Special Dividend”) to shareholders of record at the close of business February 17, 2014, which was paid on March 3, 2014. The 2014 Special Dividend totaled $25.8 million and was financed by a combination of cash on hand as well as net borrowings under the Line of Credit of $13.0 million (see Note 9 — “Line of Credit”).

On April 30, 2014, the Company’s Board of Directors approved the payment of a $0.06 per share quarterly cash dividend to shareholders of record at the close of business on May 14, 2014, which was paid on June 2, 2014.

Repurchase of Common Stock

In the first six months of 2014, the Company repurchased 101,162 shares of its common stock for an aggregate purchase price of $7.2 million or $71.04 per share. Under the Board of Directors’ authorization, as of June 28, 2014, the Company has the ability to repurchase an additional 231,568 shares of its common stock. Repurchases may be made from time to time at prevailing prices, subject to certain restrictions on volume, pricing and timing.

Stock Option Plans and Stock-Based Compensation

The Company had authorized up to 750,000 shares of common stock be reserved for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2001 Stock Option Plan (the “2001 Plan”). The 2001 Plan expired on February 20, 2011. At the April 30, 2014 Annual Shareholders Meeting, the Company’s shareholders approved an increase in the shares of common stock available for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2010 Stock Option Plan (the “2010 Plan”) from 250,000 to 500,000.

The Company also sponsors a Stock Option Plan for Nonemployee Directors (the “Nonemployee Directors Plan”), and at the April 30, 2014 Annual Shareholders Meeting, the Company’s shareholders approved an increase in the shares of common stock available for granting options to directors of the Company who are not employees from 300,000 to 350,000.

Stock option activity under the 2001 Plan, 2010 Plan and Nonemployee Directors Plan (collectively, the “Option Plans”) as of June 28, 2014 was as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Intrinsic Value
Outstanding at December 28, 2013	526,712		$	42.87	7.33	$	26,446,700
Granted	48,500		66.29
Exercised	(20,012	)	19.59
Forfeited	(5,000	)	56.85
Outstanding at June 28, 2014	550,200		$	45.65	7.15	$	14,842,200

Exercisable at June 28, 2014	305,748		$	33.17	5.96	$	11,417,400

The fair value of options granted under the Option Plans during the first six months of 2014 and 2013 were estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions and results:

	Six Months Ended
	June 28, 2014			June 29, 2013
Risk free interest rate	1.80		%	1.30		%
Expected life (years)	6			6
Expected volatility	34.1		%	32.5		%
Dividend yield	1.80		%	1.90		%
Option fair value	$	19.23		$	15.84

All unexercised options at June 28, 2014 have an exercise price equal to the fair market value on the date of the grant.

Compensation expense of $670,000 and $549,100 relating to the vested portion of the fair value of stock options granted was expensed to “Selling, General and Administrative Expenses” in the first six months of 2014 and 2013, respectively. As of June 28, 2014, the Company had $3.5 million of total unrecognized compensation expense related to stock options that is expected to be recognized over the remaining weighted average vesting period of approximately 2.6 years.